Michelmersh Brick Share Discussion Threads

[alanrussell] 15/3/2012 09:47

Results out 26/3. The RNS in February said results would be out in April so if work on the reverse of the old "bad numbers take longer to add up" maxim, the results should be good.
.
.
.
.
.
.
.
.
.
see how desperate long-suffering shareholders can become!

[envirovision] 17/2/2012 15:59

Share price remains firmly stuck in the doldrums though

[alanrussell] 01/2/2012 08:18

So the last couple of weeks drift up in price is explained. What are we to make of this? Can only be positive I guess..............? Can't help but smile at the bit about the economy in the SE remaining active where MBH has most of its business - cunning move then buying a business in the north last year.

[shanklin] 08/12/2011 07:02

Stuart

Thank you for your post

Are you able to post anything about what you do in the brick industry?

Are you seeing price changes in any parts of the market?

With the economy as it is, I would like to think the local council will be supportive of redeveloping the Blockleys site which would give MBH two sites to monetise in the near term, which would transform their cash position.

Cheers, Martin

[ed 123] 07/12/2011 22:54

Thanks, Shanklin and stuart little. Appreciate your comments. :-)

[stuart little] 07/12/2011 19:45

Whilst I agree about mothballed factories not returning Eldon has been shut a couple of years ago and made a come back. Wienerberger have factories with spare capacity so I'd guess they will try and replicate the popular Eldon bricks at other works, Denton, Cheshire probably.

Wienerberger are also shutting Rudgwick with produces a similar product to FLB based in the SE. I guess wienerberger aren't as confident in the SE market next year as MBH. But on a positive note, as Shanklin says above, take Rudgwick out of the equation and FLB has lost a competitor...every cloud and all that...

Recently we have lost a couple of niche smaller manufacturers. Swarland Brick in the NE and Caradale Brick based in Scotland. With the downturn in sales and the upturn in energy costs neither could produce bricks at a profit although both factories had suffered from a lack of investment over the years.

I guess the saviour here is the land deal...i'm not sure I see a great future in the brick side of the business....

Sorry to be a bit doom and gloom but having worked in the industry for over 15 years it's sad to see these factories shut with many good people losing their jobs.

stuart

[shanklin] 07/12/2011 18:18

Stuart, Ed

Many brick plants have been mothballed over the past 3 or 4 years. And these kilns are so difficult to get going again that these are better viewed as permanent (not temporary) reductions in industry capacity, which ultimately will help the brick market to get to a better balance between supply and demand. AIUI, the larger brickmakers have been delusional in terms of not cutting their capacity further and faster.

MBH is now focused on selling niche products into the South-East market and AIUI the core business is chugging along paying the bills. You then have the 16 acres with planning permission which will lead to significant incoming funds at some point plus the brownfield site containing the old Blockley kilns where planning permission for housing will also be sought in due course.

With P/TBV at such a low level, and the core business doing enough to survive, I cannot see the point of selling at this time.

[ed 123] 07/12/2011 17:28

Thanks, stuart little. :-)

Last few sales of shares have been absorbed without price drop. Possibly a buy order is being worked?

Looking back a few months, the chart tells its own story. Tightening credit conditions and a slowing economy are not helping share holders. Terms of the land sale and the new borrowing facility are crucial. Still no news. Now wondering if a placing will be needed?

Less confident than I was. (Where did I put those happy pills!).

[stuart little] 07/12/2011 16:51

No it isn't great out there... Wienerberger are forcasting lower sales next year. They have taken the tough decision of mothballing one of their factories at Eldon in the NE. It will be shut for a year as they have been over producing for a while now. They are predicting that the stock on the ground will see them through the year so no point in churning out more bricks.

Eldon bricks are generally lower end, housebuilder type bricks, not MBH high end niche but needless to say if Wienerberger see sales in 2012 as sluggish then it aint gonna be great!!

stuart.

[alanrussell] 07/12/2011 08:25

Doesn't look good.

[cjohn] 27/10/2011 10:19

Small sales, probbaly for personal reasons. If they sell the whole of their holding, then is the time to worry.

[davidosh] 24/10/2011 16:44

What is going on with those director shareholdings announcements ?

[cjohn] 10/10/2011 16:15

Yes, that sounds plausible and is the basis on which I have been buying MBH every time it gets down to 25p.

But there is an issue of time on the land sales. Cash flow is only just covering the debt. They really do need to get on with it and realize some of their assets, partic if they really are going to participate (actively) in any industry consolidation.

Thanks for the post.

[ed 123] 08/10/2011 12:16

As stated in the interims, MBH are in discussions with their bankers over a new term facility. They could be waiting for the price of the first 15 acres of land (my own estimate is around £6 million). The price is currently being negotiated. That could take the borrowings down from about £20 million to about £14 million. No point setting up a £20 million loan if they only need £14 million. Also the bankers would want a current market valuation to use for the remaining land (to check its sufficiency as security).

After these 15 acres have gone, there are another 80 acres of identified developable land to sell off. That could give another £30 million, or so, but less any clean up costs. Also, need to get planning permission.

It looks like the land will comfortably pay off all the debt eventually. The brick and landfill businesses are performing well in difficult times.

Of course nothing is certain, but I would think the banks would be happy to extend the loan, with the land as security.

[cjohn] 08/10/2011 10:56

and what od you think about their shortly maturing debt?

[gingerplant] 07/10/2011 14:10

Michelmersh Brick

I explained in July why I thought shares in Michelmersh Brick (LSE: MBH) presented excellent value at 30p. I was wrong. The summer sell-off and generalised fears have knocked them back to 25p, despite a very solid half-time report.

The key to the brick-maker's value is its asset value. The company buys land from which it extracts clay to make bricks, then allows landfill on the land before selling it on for development.

Michelmersh now has over 2.5 times its valuation in net tangible assets, though the real value may be greater as the land is accounted for on the balance sheet at cost, not as development land.

[ed 123] 20/9/2011 10:38

Hi Shanklin,

I don't know the wording of the agreement with Persimmon, unfortunately. So, I must wait and see what unfolds. It's just possible that the agreement was generous to MBH, as things have turned out (ie. in the light of current market conditions). Hence Persimmon now dragging their feet. But, that's only a wild guess.

Persimmon have a huge landbank, so can afford to be relaxed. They might see MBH as somewhat distressed. With its finance costs approximately eating up the operating profit, MBH is going nowhere (and certainly can't execute any bolt-ons) until it releases cash from its land.

Also, housebuilders these days are doing everything to conserve cash. So, for instance, some draft their land purchase agreements with a nominal amount paid on signing and the bulk paid when the completed house(s) are sold. That wouldn't be good for MBH. "Now money" is what MBH really wants.

Without the directors' holdings, this would be gobbled up, imho.

[shanklin] 20/9/2011 09:16

Ed

Yesterday's RNS states:

"The Board has resolved to maximise the value of our consented 15 acres of land and we continue to make progress with Persimmon and we are now in a time driven, contractual process to reach a settlement on the price payable."

At the end of this process (this year?), I think PSN will either have to pay up for the 15 acres or ship out, allowing MBH to sell to other housebuilders and meaning PSN lose access to the whole 95 acres not just this 15 acres.

[puffintickler] 20/9/2011 07:55

Good to see MBH back in profit, but they still have a long way to go.

I am a bit disappointed in the lack of information in the IMS concerning depreciation and cashflow items which makes a meaningful analysis impossible.

Hopefully the land sales will reduce debt and interest payments but the expected reduction in landfill revenue will need to be made up for by an increase in profits of the main brick business.

Overall a good hold but not more than that at present.

Any other views out there?

[alanrussell] 19/9/2011 08:45

From today's results:

The Board has resolved to maximise the value of our consented 15 acres of land and we continue to make progress with Persimmon and we are now in a time driven, contractual process to reach a settlement on the price payable.

[shanklin] 12/7/2011 12:54

Also today is

[envirovision] 07/7/2011 11:19

Yes after a set of shockingly poor results one begins to wonder if anything good is ever likely to happen to this company.